Northern Oil and Gas (NOG) M&A Announcement summary

Deal rationale and strategic fit

• Establishes a scaled presence in the Uinta Basin, adding a fourth basin and joint venture, and aligns with a strategy of partnering with efficient operators.

• Provides over a decade of continuous development potential, long-lived low-breakeven inventory, and significant long-term upside from stacked pay zones.

• Supports diversification by region and commodity mix, furthering the vision of a national non-operated franchise and reducing business and cyclical risk.

• Partnership with SM Energy leverages a proven operator, consistent with successful expansion strategy in other basins.

• Entry into the Uinta Basin is expected to attract further opportunities and incremental value creation from undeveloped and non-underwritten locations.

Financial terms and conditions

• Combined purchase price for the XCL assets is $2.55 billion, with NOG acquiring a 20% undivided interest for $510 million in cash, subject to customary closing adjustments.

• Purchase price implies a less than 3x enterprise to unhedged unlevered cash flow multiple, with net debt to LQA adjusted EBITDA remaining below 1.5x post-acquisition.

• Asset expected to generate over $170 million in cash from operations and $85 million in free cash flow in the next 12 months, with approximately $85 million in capital spend.

• Funding will be sourced from cash on hand, available credit, and cash flow from operations, with no need to access capital markets.

• A $25.5 million deposit has been placed in escrow by NOG prior to closing.

Synergies and expected cost savings

• Asset is self-funding with a high oil cut of over 85% and an average net revenue interest of 80%.

• Substantial return upside is anticipated from increased lateral lengths and cost savings from an integrated co-owned sand mine facility expected online within twelve months.

• The joint development agreement and area of mutual interest ensure aligned interests and efficient development, leveraging SM Energy’s operational track record.

• The asset’s sub-$50 per barrel breakeven enhances platform resiliency and supports strong free cash flow generation.

• Expected to be the most accretive transaction to key financial metrics in company history.